“We have 2.5% weight in TCS and we are not going to sell at this price,” Thakkar began, making his position clear.
“Whether we will add more depends… See, the two-three things which are positive is first of all the result was positive. 0.8% CC growth, 25.2% margin in spite of one month of wage hike impact; deal wins were very good, $10 billion; plus a commentary that project cancellations and deferrals have stopped; H2 is looking better.”
According to Thakkar, the current valuation leaves little reason to exit. “Considering the fact that stock is now trading at only 20 times FY27 earnings expected EPS of Rs 150, I would not sell the stock for sure.”
When asked about TCS’s investment push towards data centres and AI, Thakkar dismissed concerns over free cash flow diversion. “See, data centre, I will say that one gigawatt which is $6 to $7 billion over next five to seven years and that too with a partner who will be investing equity also and they will be partly funded through debt also. So, I would say, it is not a big strain on a balance sheet which has 50,000 crore cash already, plus it generates 50,000 crore of profits every year which is free cash flow.”
He added that market perceptions of capital allocation often miss the broader context. “When Infosys did buyback, people said that Indian companies are still rewarding shareholders by doing buybacks, while others are investing. Now when TCS is investing, you cannot have both views right. Either of the two can be right.” For Thakkar, TCS’s move represents a long-term strategic evolution. “If TCS is able to showcase good execution there, if they are able to tell to market that who are the main clients, whether the entire data centre plan is completely being booked or leased out, those things are very important; plus it will improve the relationship with their customers like AWS or Salesforce because now they are investing in physical infrastructure also for them, not only providing services. So, I do not think that any of their decisions are wrong and so I am not a seller for sure.” Turning to the metals space, Thakkar expressed continued optimism. “Metal stocks generally move in tandem with the metal prices. So, we have seen that Hindalco has moved from say 650 to 770 and aluminium prices on LME has also moved from say $2,500 to now closer to $2,740, $2,760,” he noted. “One of the reason is the weakness in dollar because you are going to expect rate cuts in US, so basically one of the good reason is dollar index falling and the other reason is, of course, China putting cap on its capacities.” He highlighted that government protection and domestic fundamentals make Indian metal companies attractive. “In aluminium they do not produce above 45 million tonnes and, of course, in steel safeguard duty and all has protected Indian steel company. So, I am constructive on the sector, overweight on the sector and with large position in Hindalco and some position in Tata Steel and I would like to hold on.”
Thakkar sees long-term triggers in play. “In Hindalco I see multiple long-term triggers, like they have got the coal mines in place now which will increase their aluminium ebitda per tonne over next two years, then Novelis new plant will start next year where the average realization will improve significantly, that is what they have guided, $600 per tonne ebitda. So, I would like to hold on to Hindalco and Tata Steels of the world in metal space.”
On the banking front, Thakkar expects strong earnings momentum ahead. “What I feel is this is a phase of the margin, maximum margin contraction which I expect on core basis is 5 to 9 bps in both cases. From here on due to GST cut-led surge in demand, the credit growth is only going to increase. Margins will also gradually inch up because of deposit repricing and CRR cut and I am seeing a very fantastic next year for banks like HDFC and ICICI and SBI also which have a pristine asset quality track record.”
He also underscored the prudence of large banks in provisioning. “ECL provisioning and that has been a point of discussion after RBI policy, there also a prudent bank like HDFC Bank has done a huge contingency provision when they came out with IPO of HDB Financial Services and raised 9,000 crores, instead of booking it in P&L, they did a contingency buffer which will come to help if they have to do any provisioning on ECL front, so that will also protect them.”
Valuations, he said, remain comfortable. “At two times price to book, 15 PE is no longer expensive. So, I would say that we have a very large weight in HDFC, ICICI, and SBI in our portfolio and we would continue to hold on.”
From IT to metals and banking, Thakkar’s stance remains clear — fundamentals and long-term value are still intact across sectors, even as markets digest short-term shifts in strategy and sentiment.
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